It's been the key question for Huntsman Corporation (NYSE: HUN): Deal or no deal?
Now we know. This week, the company reached an agreement with its private equity sponsor, Apollo Management, to end its $6.5 billion buyout transaction.
For the past six months, the parties have been embroiled in heated litigation with Huntsman getting the edge as the Delaware court ruled that Apollo had to use best efforts to close the deal . As a result, Apollo's settlement is not cheap. The fees come to about $1 billion.
Although, it's a good deal for both parties. Apollo could have lost even more money if the merger agreement had been enforced. As seen with the collapse of the BCE (NYSE: BCE) deal, there is no appetite for multi-billion-dollar deals. And since Huntsman is in a highly cyclical business – specialty chemicals -- it would have likely made it difficult to justify a buyout.
The dispute is far from over, though. Huntsman is still pursuing a lawsuit with its bankers -- Credit Suisse and Deutsche Bank -- on the deal. In other words, Huntsman may even snag even more money from the broken deal.
Still, Wall Street isn't too thrilled. In today's session, Huntsman's shares are down 44% to $3.27 by midday trading.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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